CBDCs: What Can We Learn From Dollarized Countries?
In my latest post for AIER’s Sound Money Project, I comment on the dangers of adopting a CBDC (central bank digital currency).
A central bank digital currency (CBDC) is a digital currency issued by a central bank. It is important to distinguish between digital currency and a digital claim to a currency. Commercial banks offer digital claims to a currency in the form of checking account balances. A CBDC, in contrast, would be a digital currency, not a mere claim. In simple terms, the US dollar would be issued electronically.
CBDCs are not merely a matter of intellectual curiosity anymore. Several countries have already issued CBDCs. As William Luther has written, the White House looks to be moving towards issuing a CBDC at some point in the future, as well.